Disruptive Innovation in Digital Platform Markets: A Review of the Literature
Main Article Content
Keywords
disruptive innovation, digital platforms, Pinduoduo, business-model innovation, network effects
Abstract
Digital platforms are now important competitors in retail, transport, accommodation and media. They connect different user groups and can grow quickly because data and user participation improve the service. For this reason, successful platforms are often called disruptive, even when they do not match the original theory of disruptive innovation. This paper reviews how the theory can be used more carefully in digital platform markets. It first explains low-end disruption, new-market disruption, sustaining innovation and the response of incumbent firms. It then discusses three mechanisms: entering through overlooked consumer groups, changing the business model, and using network effects and digital technology to expand. Pinduoduo is used throughout the review as a practical example. Its early focus on price-sensitive consumers, social group buying and links between consumers and merchants suggests a possible low-end disruptive path. Even so, Pinduoduo should not automatically be described as a complete disruption because its users were not all new consumers, existing platforms could respond, and some low prices depended on promotions. The paper argues that disruption theory is most useful for studying market entry and movement towards the mainstream, while platform theory is needed to explain rapid scaling, network effects and ecosystem management.
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